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District of Maple Ridge TO: His Worship Mayor Ernie Daykin DATE: December 13, 2011 and Members of Council FROM: Chief Administrative Officer ATTN: Council ouncil SUBJECT SUBJECT: 2012-2016
Financial Plan Bylaw EXECUTIVE SUMMARY: The 2012-2016 Business and Financial Plans were presented to Council at public meetings held on December 12 and 13. Council directed that a Financial
Plan Bylaw be brought forward incorporating the recommendations outlined in the 2012-2016 Financial Plan Overview report dated December 12, 2011. The Financial Plan Bylaw is in a format
that follows the legislated requirements including revenue and tax policy disclosure: the objectives and policies regarding the proportions of revenue proposed to come from various
funding sources, the distribution of property taxes among property classes, and the use of permissive tax exemptions. RECOMMENDATION(S): That Maple Ridge 20 2012-201 2016 Financial
Plan Bylaw No. 6883 - 20 2011 be given first, second and third reading readings. DISCUSSION: a) Background Context: The 2012–2016 Financial Plan was presented to Council at public meetings
held on December 12 and 13. Business Plans from all areas were also provided. The financial plan bylaw incorporates the following direction from Council: • property tax increase of
4% in 2012–2016, which includes 1% for infrastructure sustainability and 3% for general purposes, • for 2012 an increase to the fire department service improvement levy of $600,000
plus growth since 2005, the year of the inception of the levy; the increase is less in 2013. Beyond 2013 any incremental service level increases will be part of the normal business
planning process. • water user fee increase of 9% and sewer user fee increase of 5% each year of the five year plan. • recycling rate increases of 6% in 2012 and then 3% a year in 2013
through 2016.
In last year’s financial plan, Council adopted an aggressive capital program and this plan builds on that direction. The 2012-2016 Financial Plan includes a capital program of about
$129 million and anticipates funding from senior governments and some borrowings. We have about $1.5 billion invested in our infrastructure and it is important that we protect this
investment. This financial plan sets aside dedicated money for sustaining our infrastructure. As well, we are a growing community and along with that growth comes pressure on our existing
services. This financial plan provides funding to help meet growth related demands. The funding for growth and for infrastructure sustainability are in line with Council’s Financial
Sustainability Policies. Incremental property tax revenue from new construction will not be known until spring when property assessments are finalized. The growth assumption built into
the financial plan for 2012 has been reduced to 1.70% and the budgeted costs of new growth have been excluded in 2012. Not increasing budgets to address growth costs such as maintenance
of additional infrastructure and park inventory will create some pressure on operating budgets. The budget amendment in the spring will include the actual growth revenue as well as
projects that were approved in 2011 but not yet complete. The previously approved funding sources will also be included in the plan, placing no burden on 2012 property taxes. b) Desired
Outcome: A financial plan that accurately reflects the planned expenditures and methods of funding that is consistent with corporate strategic plans, policies and Council direction.
c) Strategic Alignment: All departments submitted Business Plans which were prepared using the Business Planning Guidelines 15th Edition. These guidelines are reviewed and amended annually
in consultation with Council. The Financial Plan reflects Council’s Strategic Financial Sustainability Policies and Infrastructure Funding Strategy. d) Citizen/Customer Implications:
The business plans have far-reaching citizen and customer implications. The Financial Plan reflects the financial impact of the business plans. Property tax revenue and user fees are
planned to increase as detailed in the above discussion. e) Statutory Requirements and Policy Implications: The financial plan has been prepared in accordance with statutory requirements
and Municipal financial policies. There are several requirements in the Community Charter for the Financial Plan Bylaw, including: disclosure of the proportions of revenue proposed
to come from various funding sources, the distribution of property taxes among property classes, and the use of permissive tax exemptions. Explicit policies and objectives in each of
these areas are also required. Maple Ridge’s approach to business planning, property taxation policies and other financial policies have addressed all these reporting requirements.
The attached bylaw includes this information.
Public consultation is an important and legislated component of preparing financial plans. The Business Planning Guidelines were updated last spring with an opportunity for the public
to provide feedback. Public input during business planning this December was invited through advertisements in the local paper and on the corporate website. Input was accepted through
many different mediums including: in person at the business planning presentations which were open to the public or through email, voicemail or regular mail. Regular feedback and interaction
with the public is also taken into account in developing the business plans. f) Alternatives: In the event that this bylaw is not adopted, the District is not authorized to make any
expenditure other than those identified in the 2011-2015 Financial Plan Bylaw. This will require departments to curtail or delay expenditures and only proceed with capital projects
that were identified in the previous financial plan. CONCLUSIONS: The Financial Plan is a multi-year planning, reviewing and reporting tool that represents Council’s vision and commitment
to providing quality services to the residents of Maple Ridge. The Plan provides a forecast of the financial resources that are available to fund operations, programs and infrastructure
for the five year period. The Financial Plan Bylaw can be amended to reflect changes and is routinely amended in late April or early May to include the projects that were approved but
not completed in the prior year. The change also includes an update to reflect the actual amount of property tax revenue due to the amount of real growth. The allocation of Gaming Revenue
can also be reviewed at that time. _______________________________________________ Prepared by: Trevor Thompson, BBA, CGA Manager of Financial Planning ______________________________________________
_ Approved by: Paul Gill, BBA, CGA GM Corporate & Financial Services _______________________________________________ Concurrence: J.L. (Jim) Rule Chief Administrative Officer
Attachment to Maple Ridge 2012-2016 Financial Plan Bylaw 6883-2011 Statement 1 Consolidated Financial Plan 2012-2016 (in $ thousands) 2012 2013 2014 2015 2016 REVENUES External Revenues
Development Fees Developer Contributed Assets 15,000 15,000 15,000 15,000 15,000 Developer Cost Charges 409 9,135 7,321 7,593 11,270 Developer Specified Projects - - - - - Parkland
Acquisition 200 200 200 200 200 Contributions from Others 4,316 4,215 5,719 3,742 3,979 Development Fees Total 19,925 28,550 28,239 26,535 30,449 Property Taxes 62,470 66,944 71,638
76,672 82,074 Parcel Charges 2,843 2,989 3,143 3,303 3,430 Fees & Charges 35,160 37,082 39,265 41,590 43,155 Interest 2,032 2,052 2,072 2,072 2,072 Grants (Other Govts) 3,417 5,488
3,585 2,933 16,327 Property Sales - - 4,250 - - Total External Revenues 125,847 143,105 152,191 153,105 177,506 EXPENDITURES Operating Expenditures Other Expenditures 88,697 93,373
98,256 102,669 107,569 Interest Payments on Debt 2,845 2,941 2,849 2,754 2,644 Amortization Expense 18,015 18,688 19,391 20,124 20,929 Total External Expenditures 109,557 115,003 120,496
125,547 131,142 ANNUAL SURPLUS 16,290 28,102 31,696 27,559 46,364 Add Back: Amortization Expense (Surplus) 18,015 18,688 19,391 20,124 20,929 Less: Capital Expenditures 20,144 26,119
25,647 18,788 38,848 Less: Developer Contributed Capital 15,000 15,000 15,000 15,000 15,000 CHANGE IN FINANCIAL POSITION (838) 5,672 10,440 13,895 13,444 OTHER REVENUES Add: Borrowing
Proceeds 7,926 1,274 - - - OTHER EXPENDITURES Less: Principal Payments on Debt 4,348 6,028 6,092 6,159 6,228 TOTAL REVENUES LESS EXPENSES 2,740 918 4,347 7,736 7,217 INTERNAL TRANSFERS
Transfer from Reserve Funds Capital Works Reserve 796 1,028 1,128 628 628 Equipment Replacement Reserve 2,655 2,079 1,095 1,256 1,435 Fire Department Capital Reserve 70 950 350 250
1,750 Land Reserve - - 4,250 - - Local Improvement Reserve - - - - - Sanitary Sewer Reserve - - - - - Transfer from Reserve Fund Total 3,521 4,057 6,822 2,133 3,812 Less :Transfer to
Reserve Funds Capital Works Reserve 831 1,778 1,122 1,228 1,597 Equipment Replacement Reserve 2,157 2,270 2,365 2,466 2,571 Fire Dept. Capital Aquisition 1,161 581 702 829 960 Land
Reserve 7 7 4,257 7 7 Local Improvement Reserve - - - - - Sanitary Sewer Reserve 45 45 45 45 45 Total Transfer to Reserve Funds 4,202 4,681 8,492 4,575 5,180 Transfer from (to) Own
Reserves 152 (1,128) (1,676) (1,932) (1,688) Transfer from (to) Surplus (2,212) 836 (1,002) (3,362) (4,161) Transfer from (to) Surplus & own Reserves (2,059) (293) (2,678) (5,294) (5,849)
TOTAL INTERNAL TRANSFERS (2,740) (918) (4,347) (7,736) (7,217)
`Attachment to Maple Ridge 2012-2016 Financial Plan Bylaw 6883-2011 Statement 2 Revenue and Property Tax Policy Disclosure REVENUE DISCLOSURE Objectives & Policies Property Tax Revenue
is the District’s primary revenue source, and one which is heavily reliant on the residential class. Diversification of the tax base and generation of non-tax revenue are ongoing objectives,
outlined in Financial Sustainability Policy 5.52 section 6. Business Planning Guidelines and the Financial Plan includes a 3% general tax increase, a 1% increase to fund replacement
of existing infrastructure and an increase of $600,000 plus growth since 2005, to fund the Fire Department Master Plan implementation. More information can be found in the Business
Planning Guidelines 15th Edition, Financial Sustainability Plan and the 2012- 2016 Financial Plan Overview Report. Specific policies discussing the tax increases are included in the
Financial Sustainability Plan and related policies which were adopted in 2004. Property tax revenue includes property taxes as well as grants in lieu of property taxes. Parcel Charges
are largely comprised of a recycling charge, a sewer charge and, on certain properties, a local area service or improvement charge. Parcel charges are a useful tool to charge all or
a subset of properties for a fixed or variable amount to support services. Unlike property taxation the variable amount does not need to be related to property assessment value, but
can be something that more accurately reflects the cost of the service. Revenue Proportions $ ('000s) % $ ('000s) % $ ('000s) % $ ('000s) % $ ('000s) % Revenues Property Taxes 62,470
47% 66,944 46% 71,638 48% 76,672 50% 82,074 46% Parcel Charges 2,843 2% 2,989 2% 3,143 2% 3,303 2% 3,430 2% Fees & Charges 35,160 26% 37,082 26% 39,265 27% 41,590 27% 43,155 24% Borrowing
Proceeds 7,926 6% 1,274 1% - 0% - 0% - 0% Other Sources 25,374 19% 36,090 25% 33,897 23% 31,540 21% 48,848 28% Total Revenues 133,773 100% 144,379 100% 147,943 100% 153,105 100% 177,507
100% Other Sources include: Development Fees Total 19,925 15% 28,550 20% 28,240 19% 26,535 17% 30,449 17% Interest 2,032 2% 2,052 1% 2,072 1% 2,072 1% 2,072 1% Grants (Other Govts)
3,417 3% 5,488 4% 3,585 2% 2,933 2% 16,327 9% 25,374 19% 36,090 25% 33,897 23% 31,540 21% 48,848 28% 2016 2012 2013 2014 2015
Attachment to Maple Ridge 2012-2016 Financial Plan Bylaw 6883-2011 Statement 2 (cont.) Revenue and Property Tax Policy Disclosure Fees & Charges The Business Planning Guidelines call
for an increase of 5% in fees as a guideline. Actual fee increases vary depending on the individual circumstances, the type of fee and how it is calculated. Fees should be reviewed
annually and updated if needed. Recent fee amendments include recreation fees, development application fees, business license fees and cemetery fees. A major amendment to the Development
Costs Charges (DCC), recommended no more frequently than every five years, was completed in 2008. Minor DCC amendments are done more frequently. Some fees are used to offset the costs
of providing specific services. The utility fees are reviewed annually with a view towards using rate stabilization practices to smooth out large fluctuations in rates, as set out in
the Business Planning Guidelines. Borrowing Proceeds – Debt is used where it makes sense. Caution is used when considering debt as it commits future cash flows to debt payments restricting
the ability to use these funds to provide other services. The source of the debt payments needs to be considered as does the justification for advancing the project. More information
on borrowing previously approved or proposed for 2012- 2016 can be found in the 2012-2016 Financial Plan Overview report. Other Sources, will vary greatly year to year as it includes:
- Development fees, which is the funding for capital projects from the DCC Reserve, - Contribution from others in relation to capital, - Interest earned on funds invested in accordance
with the Investment Policy - Grants, which are sought from various agencies, and may be leveraged with District funds. PROPERTY TAX DISCLOSURE The 2012 property tax revenue and updated
rates will be included in a Financial Plan Amending Bylaw that proceeds the Property Tax Rate Bylaw, as the 2012 property assessed values are not yet finalized. For information purposes
the 2011 distribution is included. Property Tax Revenue Distribution Tax Rate Multiple ($/1000) (Rate/Res.Rate) 1 Residential 43,678 77.3% 11,205,437 91.8% 3.8979 1.0 2 Utility 467
0.8% 11,671 0.1% 40.0000 10.3 4 Major Industry 611 1.1% 17,829 0.1% 34.2734 8.8 5 Light Industry 2,405 4.3% 198,725 1.6% 12.1045 3.1 6 Business/Other 9,151 16.2% 756,034 6.2% 12.1045
3.1 8 Rec./Non-Profit 54 0.1% 4,745 0.0% 11.3283 2.9 9 Farm 134 0.2% 5,338 0.0% 25.1767 6.5 Total 56,501 100% 12,199,779 100% Taxation Revenue ('000s) Assessed Value ('000s) Property
Class
Attachment to Maple Ridge 2012-2016 Financial Plan Bylaw 6883-2011 Statement 2 (cont.) Revenue and Property Tax Policy Disclosure PROPERTY TAX DISCLOSURE Objectives & Policies Property
taxes are the District’s largest source of revenue and are contained by efficient business practices. Annual business planning practices are the mechanism for resource allocation decisions.
The District’s Financial Sustainability Policy section 6 discusses the necessity of diversifying the tax base. Development of employment related properties is one method of diversification;
therefore a key performance measurement in Strategic Economic Initiatives tracks the increased investment and development of non-residential properties. A policy in the Financial Sustainability
Plan that calls for stable tax increases and the adoption of the annual increase early in the prior year in the Business Planning Guidelines provides citizens with a more stable and
predictable set of cost increases. In some cases costs are phased in over multiple years to stay within the set tax increases. Property Tax Rates It is policy to adjust property tax
rates annually to negate the impact of fluctuations in the market values of properties. Tax rates are reduced to negate the market increases. Property tax increases are then applied
at the same relative increase for all classes, unless legislation restricts the rates, as with Class 2, Utility. The Business Class and Light Industry Class properties have the same
tax rate and are treated as a composite class when setting the tax rates. This is done because the types of businesses in each class of property are quite similar. This alignment was
achieved over a long period of time with small incremental adjustments. A review was done on the Major Industry Class rates and the recommendation from the Audit and Finance Committee
and Council was a 5% property tax reduction in both 2009 and 2010 to support additional investments in the subject property and to keep rates competitive. In reviewing the tax rates
to ensure competitiveness, absolute rates, tax multiples and overall tax burden are considered. The impact that assessed values have when comparing other geographical areas must be
considered in a comparison of tax rates.
Attachment to Maple Ridge 2012-2016 Financial Plan Bylaw 6883-2011 Statement 2 (cont.) Revenue and Property Tax Policy Disclosure Permissive Tax Exemptions Council has set policies around
the use of permissive tax exemptions. They are Council Policies 5.19 though 5.24. The policies discuss Churches, Community Halls, Heritage Sites, Homes for the Care of Children and
the Relief of the Aged, the Poor, the Disabled and the Infirm, Municipal Recreational Services, Private Hospitals and Daycares, Private School and Youth Recreation Groups. Revitalization
Tax Exemption A revitalization tax exemption is available within a defined downtown area and provides a financial incentive to encourage development in the town centre. Further financial
incentives are available for buildings that qualify; additional information on the town centre incentives can be found on our website. For more information on the tax exemption, please
refer to Bylaw 6789-2011.
Attachment to Maple Ridge 2012-2016 Financial Plan Bylaw 6883-2011 Statement 3 Capital Expenditure Disclosure The sole purpose of this statement is to meet legislative requirements,
highlighting the value of the DCC program; no other conclusions should be drawn from the figures as the information could be misleading. This disclosure is required under the Local
Government Act s. 937(2); Capital costs attributable to projects to be partially funded by Development Cost Charges (DCC) must be included in the financial plan. The DCC program includes
projects as far out as 2026 so the capital expenditures must be extended to match. Certain types of projects are not planned past the five year time horizon of the financial plan. Much
less scrutiny is given to projects that are planned in years 2017 through 2030. Projects in these years typically exceed likely funding available. Capital Works Program for 2017 – 2030
(in $ thousands) Capital Works Program 317,628 Source of Funding Development Fees Development Cost Charges 125,793 Parkland Acquisition Reserve - Contribution From Others 4,353 Development
Fees Total 130,146 Borrowing Proceeds 9,169 Grants 29,191 Transfer from Reserve Funds Capital Works Reserve 11,067 Cemetery Reserve 115 Equipment Replacement Reserve 1,834 Fire Department
Capital Reserve - Infrastructure Sustainability Reserve 490 Transfer from Reserve Funds Total 13,506 Revenue Funds 135,617 Source of Funding Total 317,628